Western Digital 2008 Annual Report Download - page 45

For 2009, we expect capital additions to be approximately $800 million. Depreciation and amortization for 2009 is
expected to be approximately $475 million.
Our cash and cash equivalents of $1.1 billion are invested primarily in readily accessible, AAA rated institutional
money-market funds, the majority of which are backed by the U.S. government. The carrying value of our investments in
auction-rate securities was reduced from $203 million as of June 29, 2007 to $28 million as of June 27, 2008. The reduction
resulted from the sale of these investments as well as an additional $10 million loss recognized as other-than-temporary
losses on remaining investments. These securities are expected to be held until secondary markets become available and as a
result have been reclassified to long-term investments as of June 27, 2008. These investments are currently accounted for as
available-for-sale securities and recorded at fair value within other non-current assets in the consolidated balance sheet. The
estimated fair values of these investments are subject to fluctuation. Unrealized holding gains and losses are generally
recorded in other comprehensive income. However, if a decline in fair value is determined to be other-than-temporary, the
cost basis is written down to fair value through earnings. During 2008, we realized $3 million in losses on sales and
recognized $10 million in other-than-temporary losses on these auction-rate securities.
Financing Activities
Net cash provided by financing activities for 2008 was $326 million as compared to net cash used in financing
activities for 2007 of $86 million. Net cash provided by financing activities was $1 million for 2006. The net cash
provided by financing activities in 2008 consisted of $500 million in net proceeds from acquisition related debt (see
“Contractual Obligations and Commitments” below), $250 million repayment of convertible debentures assumed in the
Acquisition, $60 million provided by the issuance of common stock under employee plans, $60 million used to
repurchase our common stock, $89 million provided by a tax benefit from employee stock plans and $13 million used to
repay other long-term debt. The net cash used in financing activities in 2007 consisted of $73 million used for
repurchases of our common stock and $43 million used for repayments of long-term debt, offset by $30 million provided
by the issuance of common stock under employee plans. The net cash provided by financing activities in 2006 consisted of
$78 million provided by the issuance of common stock options under employee plans, offset by $54 million used in
repurchases of our common stock and $23 million used for repayments of long-term debt.
Off-Balance Sheet Arrangements
Other than facility and equipment lease commitments incurred in the normal course of business and certain
indemnification provisions (see Capital Commitments below), we do not have any off-balance sheet financing
arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any obligation
arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries
that are not included in the consolidated financial statements. Additionally, we do not have an interest in, or relationships
with, any special-purpose entities.
Contractual Obligations and Commitments
The following is a summary of our significant contractual cash obligations and commercial commitments as of
June 27, 2008 (in millions):
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
Long-term debt, including current
portion .................... $ 500 $ 19 $187 $294 $—
Capital lease obligations .......... 9 8 1 — —
Operating leases ............... 56 13 21 13 9
Unrecognized tax benefits......... 25 — — 25 —
Purchase obligations ............ 4,100 4,078 8 7 7
Total...................... $4,690 $4,118 $217 $339 $16
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